Fed Chairman Jerome Powell to speak today

Top daily news

Investors are looking forward to Fed Head Jerome Powell’s speech and his views on further rate cuts. Yesterday’s fall in US stock indices triggered a wave of sales on European and Asian exchanges. Gold and oil continue to be traded in very narrow bands.

Forex news

Currency Pair

Change

EUR USD

+0.04%

GBP USD

-1.2%

USD JPY

+0.13%

Today the US dollar index fell slightly for the second day in a row amid the discussion of negative interest rates by the US authorities. Earlier, US President Donald Trump called on the Fed to lower the base rate to a negative value. In his opinion, this will greatly simplify the refinancing of public debt and help the development of the economy. Now the rate is + 0.25%. The next Fed meeting will be on June 10th. Resolve of negative rates proponents is supported by the extremely low inflation. In April, it amounted to only 0.3% in annual terms. Thus, the allocation of financial assistance to corporations ($ 2.3 trillion) did not adversely affect consumer prices. In theory, negative rates can weaken the dollar. Investors are waiting for today’s speech by Fed Chairman Jerome Powell and his opinion on monetary policy. It will start at 15-00 CET. The New Zealand dollar depreciated today after the regular meeting of the Reserve Bank of New Zealand (RBNZ). The RBNZ kept the rate (+ 0.25%), but announced the possibility of its further reduction, and also doubled the amount of emissions (quantitative easing) in order to provide financial assistance to the national economy.

Stock Market news

Indices

Change

S&P 500

-2.03%

Dow Jones Index

-1.87%

Nasdaq 100

-2%

Nikkei Index

-2.1%

On Tuesday, US stock indexes fell significantly. The main reason for this was that investors feared the mitigation of quarantine in some states might increase the number of coronavirus patients and even trigger a second wave of the pandemic. An additional negative factor was the worsening of trade and political relations between China and the US after American President Donald Trump announced that China might be responsible for the Covid-19 pandemic. Against the background of a possible Fed rate cut, shares of American banks JPMorgan Chase & Co (-3.3%) and Goldman Sachs Group Inc (-3.2%) fell yesterday. European stock indices went down today. Like in the USA, the shares of the largest banks turned out to be the top losers: Commerzbank (-5.6%), ABN Amro (-6.1%) and Deutsche Bank (-4%). Today no significant macroeconomic data are expected to be published in the US and the EU.

Commodity Market news

Commodities

Change

WTI Crude

+1.01%

Brent Crude Oil

+0.7%

On Wednesday, oil quotes hardly changed. On the one hand, investors’ fears that a 2nd wave of the coronavirus pandemic may begin are having a negative effect. On the other hand, the abolition of quarantine measures in a number of countries increases the demand for gasoline and other fuels. Official data on US oil reserves for the week from U.S. Energy Information Administration, which may affect the market, will be published tonight. Total US oil reserves are predicted to increase, but the reserves in the Cushing storage facility, Oklahoma, are likely to decline by 2.3 million barrels, for the first time since February this year.

Gold Market News

Metals

Change

Gold

+0.33%

For several weeks, gold has been traded in a narrow range near the psychological level of $ 1,700 per ounce. Lowering the Fed rate into the negative zone may increase the demand for precious metals. Today’s speech by Fed Chairman Jerome Powell can affect their quotes.

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